The East Bay Accountant Blog | Dublin, Pleasanton, San Ramon

The Young and the Rich Should Give to Charity

noreply@blogger.com (Anonymous) — Wed, 04 Jun 2014 14:51:00 +0000

There are two schools of thought when it comes to the right time to become a philanthropist.

Some like Steve Jobs believe you should spend most of your life making your fortune and giving it away only toward the end. Others, like Mark Zuckerberg, have started on the road to philanthropy at the same time they started the road to great wealth.

Citigroup founder and philanthropist Sandy Weill said that young entrepreneurs and executives should start giving to charity as early as possible. He added, executives who say they have no time are just looking for an excuse.

Click here for complete article from cnbc.com.

Is it a Hobby or a Business?

noreply@blogger.com (Anonymous) — Fri, 23 May 2014 21:03:00 +0000

The IRS has very clear guidelines on the difference between hobbies and businesses. The reason for the guidelines is to help taxpayers determine what they can and cannot deduct as expenses.

According to the IRS, in order to make this determination, taxpayers should consider the following:

• Does the time and effort put into the activity indicate an intention to make a profit?

• Does the taxpayer depend on income from the activity?

• If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?

• Has the taxpayer changed methods of operation to improve profitability?

• Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?

• Has the taxpayer made a profit in similar activities in the past?

• Does the activity make a profit in some years?

• Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

We recently had a meeting with a number of Medical Doctors that are in the process of launching a business and as can be expected with most startups the losses in the first year will be substantial. The initial investment is in excess of $7,000,000.00, although the actual amount is not relevant in this analysis. Their main goal is to ensure the losses will offset their business income from other activities and not be deemed a hobby by the IRS. No one would ever accuse a Medical Doctor of being a hobby rather than a business but the point is, the recommendations are similar for those who want to avoid having the IRS rule your business losses were not business related but simply a hobby, which will result in the losses being disallowed.

To ensure the IRS sees your undertaking as a business rather than a hobby we recommend the following:

1) Establish an Internet presence.

2) Develop a Business Plan. Judges in Tax Court love business plans

3) Consult Independent Professionals: CPA, PFS and a Corporate Attorney.

4) Prepare profit projections.

5) Conduct a market analysis.

6) Establish an accounting system.

7) Request a Federal Identification Number.

8) Conduct an Entity Selection Analysis: S Corporation vs. LLC

9) Prepare a formal budget and break-even analysis.

10) Keep separate personal and business records.

11) Do not combine personal activities with business to avoid the perception of deriving pleasure or entertainment.

12) Invest a significant amount of time conducting the business activity.

13) You must have an actual objective of making a profit.

14) If your business made a profit in any three out of the past five consecutive years, it is presumed to have a profit motive. This means that if you claim a loss for the third straight year after starting your business, you may be inviting an audit.

15) You maintain accurate books and records and used them to improve the performance of a losing project.

16) Business cards, a well-maintained set of books, a separate business bank account, current business licenses and permits, and advertising or other marketing efforts will all help to persuade an IRS auditor that your activity really is a business.

17) Complying with Local Business and State Rules: City Business License and Permits and Sales Tax Identification Number could help your case.

18) Lastly, in case of an audit, let your tax advisor do the talking.

Palma Financial Services has over 15 years experience with these tax rules and regulations. Call us for a no-pressure, free consultation. Your financial security is our #1 priority.

Be Your Own Banker

noreply@blogger.com (Anonymous) — Wed, 21 May 2014 20:12:00 +0000

Ever wish you had some extra cash for special occasions or emergencies? Ever think about securing a loan? Perhaps you need a new car, or a vacation. Perhaps your home needs improvements, or your business needs some new equipment. Or perhaps you need some extra cash to pay for your child’s college education.

You could go to a bank, fill out forms, get interviewed and subject yourself to a very lengthy process with no guarantees. Or, you could be your own banker. Imagine that, no financial institutions to deal with, no credit card companies, no banks. You are your own banker. How does that work you ask, simple, use a specially designed dividend paying whole life insurance policy. You then borrow against the cash value of the policy and use the death benefit as collateral against the loan.

Think of the benefits:

1. Get off the Wall St. train wreck and stop putting your hard earned cash at risk. During the 2008 recession the stock market lost nearly $2 trillion in savings from retirement accounts. With a whole life insurance policy you are guaranteed a yearly rate of return payable as dividends.

2. Access to your money anytime for anything, with little or no taxes and no government penalties. No mandatory withdrawals.

3. Borrow money from yourself. Pay interest to yourself, rather than some bank.

4. No defaults. Can’t pay yourself back, no problem, the policy value is lowered, but no bill collectors, no bad credit report.

5. No minimum or maximum amounts to get started or pay-in. Your income and assets will determine that, not a government regulation.

Two giants of business and industry used this method to help finance their dreams: Walt Disney borrowed from his life insurance policy for Disneyland and Ray Kroc borrowed from his to help start McDonald’s. Perhaps you do not think you’re in their league; think again, funding a dividend paying whole life insurance policy could be a lot easier than you think. Consider the following:

- Home Equity
- Traditional Savings Account
- Your own IRA or 401(k)
- Adjust your tax refund
- Convert an already existing policy

An experienced, trusted professional financial advisor would best be able to gauge your personal situation. A family friend with minimal knowledge could do you more harm than good despite his good intentions. Palma Financial Services has over 15 years experience with these specially created life insurance policies. Call us for a no-pressure, free consultation. Your financial security is our #1 priority.

Life Insurance as Alternative to IRA

noreply@blogger.com (Anonymous) — Tue, 13 May 2014 15:49:00 +0000

An Individual Retirement Account (IRA) is a tried and true savings vehicle for people seeking financial security in the Autumn of their years. In a perfect world the maximum amount is added tax-free every year and if invested wisely grows tax-free as well. Then beginning at age 70 1/2 distributions are taken yearly, taxes are paid, and everyone enjoys the travel and leisure of retirement.

Unfortunately as we all all know, we don't live in a perfect world. Suppose at age 71, the owner of the IRA dies unexpectedly. Let's say there's $400k in the IRA that will now be passed on to beneficiaries. Unlike real estate or regular stock account transfers, an IRA is taxable. All the deposits and gains are now subject to income tax when received by the beneficiary. At a conservative 35% tax rate thats $140k for the IRS and only $260k for the heirs. A tax bill like that will shock most beneficiaries and many will be forced to sell securities or other assets to pay for it.

It is surely not the intent of the IRA owner to pass on a highly taxable vehicle to his or her heirs. If only he or she knew there was an alternative - life insurance. Yes, life insurance. If you have the forethought to know that you will be passing on your IRA to your heirs when you die then a specially tailored life insurance policy will leave them with more money than an IRA, bottom line.

A Life Insurance policy has the following additional benefits:

1. No funding limitation
2. No early withdrawal penalties
3. Tax deferral, safety, and immediate liquidation
4. The entire tax-sheltered accumulation passes income tax free to the beneficiary.

The time to act is now. The earliest point in time that you can enter a life insurance contract is going to be the lowest cost and highest return in the long-run for total family wealth in the end.

Please call Palma Financial Services, Inc for a no-pressure, informative, free consultation. Ask us about Life Insurance as an alternative to an IRA, or if you already have an IRA, how to most efficiently transfer the balance from an IRA to a life insurance policy. We are here to protect and serve your financial security.

Funding Buy-Sell Agreements with Life Insurance: Don't Bet the Ranch

noreply@blogger.com (Anonymous) — Fri, 25 Apr 2014 14:47:00 +0000

Prior to 2010, Bob Mason was living the good life. In partnership with his Dentist, they owned a local horse-boarding ranch on 114 golden California acres. They were approaching two decades of working together when the unthinkable occurred - the Dentist unexpectedly passed away.

Over the course of the next two years Bob tried his best to keep the business going, but ultimately, the weight of a lengthy and protracted court battle to settle the estate was too much to bear. Saddled with a faltering business, mounting legal fees, and various negotiated settlements, Bob was left with no option but to declare bankruptcy. He not only lost the business he and his partner had built together, but also the horses, the facilities, and the ranch he had dreamed of since a little boy growing up on a farm.

Today Bob is nearing 80 years of age, instead of nestling into retirement after a lifetime of work, he is experiencing serious financial challenges and had to return to the daily grind of driving trucks to supplement his income.

What makes this tale such a tragedy is that with a little forethought the bankruptcy could have been avoided. A Buy-Sell Agreement funded with Life Insurance could have saved Bob his ranch.

What is a Buy-Sell Agreement?
A Buy-Sell Agreement is a written contract among the owners of a company in which each owner agrees that upon the occurrence of a specified event, such as a death or the separation from the business, their shares will be sold to the surviving owner at a specified price and that each owner commits to buy the shares of their departing co-owner.

There are three types of Buy-Sell Agreements. The first, the Cross Purchase Agreement, allows the remaining co-owner to purchase the interest of the departing owner. The second, the Entity or Redemption Agreement, requires the business itself to purchase the interest of the departing owner. The final type, the Hybrid Agreement, is a cross between the previous two, requiring the remaining owners and business to purchase the interest of the departing owner. The remaining owner has the option to buy the departing owner’s interest. If he chooses not to, the business would be obligated to do so.

A Buy-Sell Agreement is often funded with Life Insurance on each partner’s life. That way when a death occurs the benefits immediately kick in. The company or partner receives the death benefits from the policy and money is paid to the surviving heirs of the deceased as payment for their interest in the company.

Bob Mason wonders why his tax preparer and financial advisors never mentioned a Buy-Sell Agreement funded with life insurance. He wishes they had.

Today Bob wants other business owners to learn from his experience.

“Its incredible,” he said, “I could have easily avoided this nightmare by paying a couple of hundred dollars a month on a life insurance policy for my partner.”

“I ended up betting the ranch on someone else's health," he said, "No one should ever have to do that."

If you have any questions regarding Buy-Sell Agreements funded with Life Insurance please call local experts, Palma Financial Services Inc. in Dublin, CA. We can be reached by email, cpa@mpalma.com or phone, at 925-307-5454.

California Real Estate: Foreclosures and Short Sales

noreply@blogger.com (Anonymous) — Mon, 07 Apr 2014 15:55:00 +0000

For most homeowners, being upside down on their mortgage seems normal. But with the economy on an upswing, this may soon not be the case for much longer.

According to DataQuick President John Walsh “The median home price across the state rose 22.1% from a year earlier, to $364,000, in the fourth quarter of 2013, a steep rise driven in large part by investors and families fighting over a shortage of homes for sale. For homeowners who are nearing foreclosure and underwater (meaning they owe more on their mortgage than the house is worth), that appreciation means they are less likely to walk away.”

“There’s a strong incentive to hang on,” he said.

For those also in the process of a short sale, there may be some good news as well. With the Mortgage Forgiveness Debt Relief Act set to expire at the end of 2013, Senator Barbara Boxer wrote to the IRS to find out where California Homeowners stood with regard to short sales. As a result of a letter from Senator Barbara Boxer to the IRS, Californians now have clear guidance on the tax laws with respect to short sales. In November, Senator Boxer received a response from the IRS clarifying that California families who have lost their homes in a short sale will not be subjected to a tax penalty for debt forgiven after the federal law prohibiting such penalties expires at the end of this year. The Franchise Tax Board has agreed with those clarifications.

Should you have any additional questions please feel free to contact our office.

Palma Financial Services
11840 Dublin Blvd Dublin, CA 94568
(925) 307-5454 (408) 295-4963
www.mpalma.com

Para la mayoría de propietarios de viviendas, tener un patrimonio negativo en su hipoteca pareciera ser algo normal. Pero con la notable mejora en la economía este podría no ser el caso por mucho tiempo más.

Según John Walsh, Presidente de DataQuick “ El precio promedio de las casas en este estado aumento 22.1% en comparación al año anterior, llegando a $ 364,000 en el cuarto trimestre del 2013; un aumento substancial motivado en gran parte por la competencia entre compradores inversionistas y familias en un mercado con escasez de inventario. Para los propietarios de viviendas quienes están a punto de sufrir una ejecución hipotecaria (Juicio Hipotecario) y/o patrimonio negativo en su hipoteca (es decir que la deuda hipotecaria es mayor que el valor de la casa), este aumento de precio significa que es menos probable que ellos decidan abandonar la propiedad.

“Existe un gran incentivo para seguir aguantando” dijo él.

También podrían haber buenas noticias para aquellos que se encuentran en el proceso de venta corta. Con motivo de la expiración de la Ley del Perdón de la Deuda Hipotecaria (Mortgage Forgiveness Debt Relief Act) programada a expirar a finales de 2013, la Senadora Barbara Boxer escribió al IRS para averiguar cuál sería la situación de los propietarios de casas en California con relación a los procesos de ventas cortas. Como resultado de esa carta enviada por la Senadora Boxer, ahora los Californianos tienen una orientación clara sobre las leyes tributarias en relación a las ventas cortas. En Noviembre, la Senadora Boxer recibió respuesta del IRS aclarando que las familias en California que hayan perdido sus casas en una venta corta no estarán sujetas a una multa tributaria por deuda perdonada después de la expiración, a fines del 2013, de la ley federal que prohíbe dichas sanciones. La Franchise Tax Board estuvo de acuerdo con dichas aclaraciones.

Si tuviera cualquier pregunta adicional por favor no dude en ponerse en contacto con nuestras oficinas.

Palma Financial Services
11840 Dublin Blvd Dublin, CA 94568
(925) 307-5454 (408) 295-4963
www.mpalma.com

Corporate PersonHood - A Brief History

noreply@blogger.com (Anonymous) — Wed, 02 Apr 2014 15:10:00 +0000

Here at Palma Financial Services, Inc., we often encourage our clients to establish a corporate entity for their business activities. A corporate entity is afforded the same rights as a natural person. In 1886, the Chief Justice of the Supreme Court extended the Fourteenth Amendment equal protection clause to corporations. Corporate personhood is the legal concept that a corporation may be recognized as an individual in the eyes of the law. Thus, by incorporating you have created a separate entity which is entitled to equal rights under the constitution of the U.S.

Should you have any questions about this concept please send us an email at michael@mpalma.com or 408-295-4963/925-307-5454

Aquí en Palma Financial Services, Inc., a menudo exhortamos a nuestros clientes a establecer una entidad corporativa para sus actividades comerciales. A una entidad corporativa se le concede los mismos derechos que una persona física. En 1886, el Presidente del Tribunal de la Corte Suprema amplió la Decimocuarta Enmienda de la Constitucion y extendio la cláusula de igual protección a las corporaciones. Personalidad corporativa es el concepto legal de que una corporación puede ser reconocido como una persona ante los ojos de la ley. Por esa razon, mediante la incorporación se crea una entidad separada que tiene derecho a la igualdad de derechos bajo la Constitución de los EE.UU.

Si usted tiene alguna pregunta acerca de este concepto, por favor envíenos un correo electrónico a michael@mpalma.com o 408-295-4963/925-307-5454

An Appreciation of my Mentor, Carlos Figueroa, CEO, Greater San Jose Hispanic Chamber of Commerce

noreply@blogger.com (Anonymous) — Mon, 31 Mar 2014 14:05:00 +0000

During my career I have been blessed with the opportunity to work with visionaries and people that do not take no for an answer. Carlos Figueroa is one of those individuals; he was a paratrooper during WWII and a successful real estate broker in San Francisco, financially literate and disciplined, which allowed him to retire young.

After retiring he has dedicated himself to mentoring entrepreneurs and for the last 11 years guiding his pet project, the Greater San Jose Chamber of Commerce (GSJCC), a new and very innovative chamber of commerce in San Jose, CA, the heart of Silicon Valley.

I remember the first time I realized he was a leader and visionary; he did not bother to ask but told me we were meeting at 2AM for a strategy business planning session. For a few minutes, I though he must be high or crazy, but I had know him long enough to realize he does not smoke, drink or takes any mind altering substances, with the exception of coffee. My disdain for the early meeting was apparent and people know I am not an early morning person. The concept makes sense if you want to break old habits once must break from established methods; meeting at 2AM to plan the future of an organization was definitely setting the tone for what was to come.

Carlos Figueroa, the current CEO and visionary, of the Greater San Jose Hispanic Chamber of Commerce, came to me with the idea of starting a new chamber and ask me to be part of the effort. The initial meeting took place in my office in 2000. The goal was to provide an alternative for Hispanic Entrepreneurs to expand their networking activities beyond the brick and mortar businesses in the Bay Area. We needed to provide business owners another venue to network locally and globally.

However, there was a big problem, there was already a San Jose Hispanic Chamber of Commerce with a long history. And as I expected, the reaction of their leaders and some members of the existing chamber were not very positive.

After considering his vision and the political fallout from the old guard and establishment, I decided the status quo was no longer an option, therefore I accepted his offer.

The established San Jose Hispanic Chamber, which claims to be over 100 years old, called our actions "divisive," but as we know complacency leads to stagnation and competition leads to innovation. My involvement made some powerful people very angry and it made me unpopular in some circles. Although it was very difficult at times, I do not think it has affected my career or businesses adversely.

I became the founding Chairman of the Board of the new Greater San Jose Chamber of Commerce when I was 30 years old. I served from January 2003 to January 2004 and it was a very rewarding experience. The organization has done a lot of good and positively impacted the lives of many businesswomen and men in Silicon Valley and Internationally. I am one of those individuals. The Chamber gave me the opportunity to lobby Congress on behalf of the White House for the successful approval of the Central American Free Trade Agreement. During the lobbying effort I visited the White House, Congress, State Department, Organization of American States, and met a number of Ambassadors. I had the honor to meet President Bush, President Clinton and Collin Powell but most importantly I spoke with countless members of congresswomen and men over a six-month period, to ask them to support CAFTA, which passed by a few votes.

As a professional or business owner, you should seriously consider joining the GSJCC. I cannot guarantee you will visit the White House or Congress but you never know! You will definitely start thinking locally and globally.

Should you have any a questions please email us at cpa@mpalma.com.

To your success. - Miguel Palma, CEO, Palma Financial Services Inc.

Life Lessons - A Grandfather's Last Letter

noreply@blogger.com (Anonymous) — Thu, 20 Mar 2014 14:36:00 +0000

On Sept. 3, 2012, James K. Flanagan of West Long Branch, N.J., died unexpectedly of a heart attack. He wrote this letter to his five grandchildren just months earlier and it is reprinted here with the permission of his daughter Rachel Creighton.

Dear Ryan, Conor, Brendan, Charlie, and Mary Catherine,

My wise and thoughtful daughter Rachel urged me to write down some advice for you, the important things that I have learned about life. I am beginning this on 8 April 2012, the eve of my 72nd birthday.

1. Each one of you is a wonderful gift of God both to your family and to all the world. Remember it always, especially when the cold winds of doubt and discouragement fall upon your life.

2. Be not afraid . . . of anyone or of anything when it comes to living your life most fully. Pursue your hopes and your dreams no matter how difficult or "different" they may seem to others. Far too many people don't do what they want or should do because of what they imagine others may think or say. Remember, if they don't bring you chicken soup when you're sick or stand by you when you're in trouble, they don't matter. Avoid those sour-souled pessimists who listen to your dreams then say, "Yeah, but what if . . ." The heck with "what if. . ." Do it! The worst thing in life is to look back and say: "I would have; I could have; I should have." Take risks, make mistakes.

3. Everyone in the world is just an ordinary person. Some people may wear fancy hats or have big titles or (temporarily) have power and want you to think they are above the rest. Don't believe them. They have the same doubts, fears, and hopes; they eat, drink, sleep, and fart like everyone else. Question authority always but be wise and careful about the way you do it.

4. Make a Life List of all those things you want to do: travel to places; learn a skill; master a language; meet someone special. Make it long and do some things from it every year. Don't say "I'll do it tomorrow" (or next month or next year). That is the surest way to fail to do something. There is no tomorrow, and there is no "right" time to begin something except now.

5. Practice the Irish proverb: Moi an olge agus tiocfaidh sí "Praise the child and she will flourish."

6. Be kind and go out of your way to help people -- especially the weak, the fearful, and children. Everyone is carrying a special sorrow, and they need our compassion.

7. Don't join the military or any organization that trains you to kill. War is evil. All wars are started by old men who force or fool young men to hate and to kill each other. The old men survive, and, just as they started the war with pen and paper, they end it the same way. So many good and innocent people die. If wars are so good and noble, why aren't those leaders who start wars right up there fighting?

8. Read books, as many as you can. They are a wonderful source of delight, wisdom, and inspiration. They need no batteries or connections, and they can go anywhere.

9. Be truthful.

10. Travel: always but especially when you are young. Don't wait until you have "enough" money or until everything is "just right." That never happens. Get your passport today.

11. Pick your job or profession because you love to do it. Sure, there will be some things hard about it, but a job must be a joy. Beware of taking a job for money alone -- it will cripple your soul.

12. Don't yell. It never works, and it hurts both yourself and others. Every time I have yelled, I have failed.

13. Always keep promises to children. Don't say "we'll see" when you mean "no." Children expect the truth; give it to them with love and kindness.

14. Never tell anyone you love them when you don't.

15. Live in harmony with Nature: go into the outdoors, woods, mountains, sea, desert. It's important for your soul.

16. Visit Ireland. It's where the soul of our family was born -- especially the West: Roscommon, Clare, and Kerry.

17. Hug people you love. Tell them how much they mean to you now; don't wait until it's too late.

18. Be grateful. There is an Irish saying: "This is a day in our lives, and it will not come again." Live every day with this in mind.

As was written in his obituary, James K. Flanagan "was proudly liberal and fought unyieldingly for the underdog. He was an accomplished author, poet, and seanchai -- Irish storyteller; he reveled in recounting the joy of growing up Catholic in Jersey City and his adventures in the Adirondack Mountains and on the Western coast of Ireland. His greatest love was spending time with his family, most of all his five grandchildren" Ryan (11); Conor (10); Brendan (9); Charles (8); and Mary Catherine (5)."

Why I Love My Profession

noreply@blogger.com (Anonymous) — Wed, 05 Mar 2014 17:46:00 +0000

I have known Jose Antonio for over 15 years. Approximately 12 years ago Jose and I had a discussion about his young son’s college education. Jose was concerned how he was going to pay for it. I proposed a life insurance policy as a means of college planning.

Fast-forward a dozen years, his son, Omar Antonio, has just graduated from Concordia University in Montreal with a major in Film Production. For graduate work Omar had applied to the prestigious American Film Institute in Los Angeles. During the interview at AFI Omar was asked how he was going to afford the nearly 100k tuition and living expenses. Omar responded, “My father did college planning many, many years ago anticipating this very day.”

Jose and I got together recently on another matter and he told me the story about his son’s interview at AFI, and although accepted, his subsequent decision to attend New York University's Graduate Film Program.

Jose could not be prouder. He was beaming. He took my hand into both of his and said to me, “Thank you Miguel, you helped make this possible.”

I left my meeting with Jose and drove back home feeling very good about myself. It wasn’t just the look of pride on Jose’s face or his appreciation, but the warm feeling that my expertise helped to make it possible.

At the end of the day it’s all about helping people and that is why I love my profession.

If you would like to start saving for your son or daughter, please contact us at www.mpalma.com

Per-Diem Rate for Truckers

noreply@blogger.com (Anonymous) — Sat, 01 Mar 2014 16:52:00 +0000

Q. I am a company driver. What is deductible when I’m on the road?

A. While self-employed individuals can generally deduct any expenses incurred to earn their income, company drivers are limited to non-reimbursed expenses required by their employer. You are entitled to per diem for overnights and motel expenses. A good rule to follow for deductions would be any expenses incurred that are necessary or required in the performance of your job and/or operation of the truck but are not reimbursed by your company, such as uniforms, gloves, logbooks, maps, cell phone, CB, tools, Windex, paper towels, showers, etc. Remember, as a company driver, these deductions are only available if you itemize and are not available if you take the standard deduction.

Q.What is the per diem rate?

A.The per diem rate for meals in 2014 is 80% of $59 per day.
The per diem rate for meals in 2013 was 80% of $59 per day.
The per diem rate for meals in 2012 was 80% of $59 per day.
The per diem rate for meals in 2011 was 80% of $59 per day.
The per diem rate for meals in 2010 was 80% of $59 per day.
The per diem rate for meals in 2009 was 80% of $52 per day.
The per diem rate for meals in 2008 was 80% of $52 per day.
The per diem rate for meals in 2007 was 75% of $52 per day.
The per diem rate for meals in 2006 was 75% of $52 per day.
The per diem rate for meals in 2005 was 70% of $41 per day.
The per diem rate for meals in 2004 was 70% of $41 per day.

The per diem rate for meals when in Canada is 80% of $65 per day

Per Diem can only be taken when the driver spends the night away from home.

Tax Preparation Discount for Individuals and Married Couples

noreply@blogger.com (Anonymous) — Fri, 28 Feb 2014 01:10:00 +0000

It is no secret that our economy is improving, but perhaps not quickly enough for those on the lower and middle rungs. At Palma Financial Services in Dublin, CA, we are committed to helping those in need and to keep the positive momentum of our economic recovery moving forward. For the first time in our company history, we are offering a discounted tax preparation service to individuals and married couples whose combined income is at, or below, $50,000 a year.

All clients who qualify will have their taxes prepared by Certified Public Accountant, Miguel A. Palma, at a reduced rate of $100.00. This reflects more than an 85% discount off our regular tax preparation fees.

"We want to make sure we do our part to help all clients reach their full return potential," said Palma.

This offer is valid through 3/31/14. Call now for an appointment 925-307-5454.

Descuento en la preparación de Impuestos para personas de bajos recursos y/o parejas casadas

noreply@blogger.com (Anonymous) — Wed, 26 Feb 2014 15:54:00 +0000

No es un secreto que nuestra economía está mejorando, pero quizá no lo suficientemente rápido para aquellas personas que se encuentran en los peldaños económicos bajos y medios.

En Palma Financial Services, Inc. de Dublin, CA nos hemos comprometido a ayudar a aquellas personas necesitadas con la finalidad de mantener avanzando el impulso positivo de nuestra recuperación económica. Por primera vez en la historia de nuestra compañía estamos ofreciendo un descuento en la preparación de impuestos para personas de bajos recursos y parejas casadas cuyos ingresos anuales sean de $50,000.00 ó menos.

Todos aquellos clientes que califiquen tendrán sus impuestos preparados por Miguel A. Palma, CPA (Contador Publico Certificado) a la tarifa reducida de $100.00. Esto refleja más de un 85% de descuento de nuestra tarifa normal de preparación de impuestos.

“Queremos asegurarnos que estamos haciendo todo lo posible por ayudar a todos los clientes a conseguir el máximo retorno potencial en sus impuestos”, dice Palma.

Esta oferta es válida hasta el 31 de Marzo de 2014. Llame de inmediato al 925-307-5454 para separar su cita.

Ignoring Tax Class Diversification

noreply@blogger.com (Anonymous) — Sat, 22 Feb 2014 15:58:00 +0000

I originally wrote the following article in November, 2011. I am choosing to republish it today because I think it is as relevant today as it was then. If you have any questions please call or email. - Miguel Palma, CPA, PFS, CGMA.

Warren Buffett is widely regarded as one of the most successful investors in the world. Here are a few Quotes from the “Oracle of Omaha” on diversification:

“Diversification is a protection against ignorance.”

“Risk can be greatly reduced by concentrating on only a few holdings.”

Based on these quotes, it is obvious Buffett is not a big fan of diversification. But most of us and our clients are not Warren Buffett.

Every time we turn on the financial channels or attend an investment seminar someone is promoting diversification. This notion has been part of mainstream financial planning for a long time. There is a widespread belief in the truth of statements such as “studies show that asset mix determines 93.6 percent of the return of a portfolio.” This concept has become a financial mantra and has become second nature. For now let’s just assume diversification is critical for the long term health of a portfolio.

As CPAs and Personal Financial Specialists (PFSs), are we truly serving our clients best interest by only emphasizing the funding of retirement plans for today’s “tax write-off”, instead of considering the concept of tax class diversification during the tax and financial process with our clients?

Are we telling our clients the whole story? Are we really helping them prepare for their financial future? Over the last 13 years, I have personally designed and established over 80 qualified pension plans, mostly defined benefit (DB) plans. However, in the last five years I have been seriously considering the financial and tax logic of encouraging my clients to only focus their resources on tax deductions by funding qualified plans exclusively. It is a lot easier to convince a client to fund a DB plan to generate tax write-offs, rather than having the client pay income taxes now to create a tax-free income stream in the future and eliminating the typical restrictions of qualified plans.

One of our professional responsibilities is to educate our clients on the long-term risk of tax-deferred vehicles and the resulting tax bomb in the future. Helping our clients overcome the need for instant gratification to minimize their current income taxes is a must. Instant gratification is mainly concentrating on the immediate result and not thinking about the outcome in the future or what its effect is later in life.

Another way to look at it, instant gratification is the habit of always wanting to enjoy now and not having the patience to wait for future benefits. Anything that gives us temporary happiness or excitement, but is actually not a good thing for your life, can be put in this category.

"We care a lot more about today than about the future," explains Harvard economics professor David Laibson. "Humans, like a lot of other animals, place full weight on what happens right now and half weight on what happens even a few days away."

That's because we react emotionally to immediate gratification and think logically about future rewards. And emotion often trumps logic.

That said, why do we seem to neglect the idea of diversifying from a tax-class perspective? If we diversify our asset classes so that losses do not negatively impact our financial pictures as much, then doesn’t it make sense to use the same logic for tax classes?

In November 2011, the national debt is $14.9 trillion, it is more than likely income tax rates will increase in the coming years and we may experience significant changes in the U.S. tax code, as increasing tax revenues will be a way that our government tries to lower this debt. Therefore, tax class diversification is a must.

When I first introduce this concept to my clients I simply refer to tax classes as “future income buckets”; a taxable income bucket and a tax free income bucket. I often asked my clients “when you access your money in the future, which bucket would you rather access the tax-free bucket or the taxable bucket?” Obviously, most of my clients always answer the tax free bucket.

When we access our money, there are only two categories from which we can pull money. The first one is the taxable category, which includes tax deferred, tax qualified plans and various types of annuities to name just a few. There will be taxes due as we take distributions out of this category. The second category is tax-free income, when qualified distributions are taken. The Roth IRA is a well-known financial vehicle in this bucket.

There is a lesser-known financial vehicle for generating tax-free income in the future. The latest tool in my arsenal for creating tax free income is the Section 79 Permanent Benefit Plans. The Section 79 plan is a benefit plan designed to provide permanent benefits that are in addition to the group term-life insurance available through IRC Section 79. Under such arrangements, employers can offer group term life insurance to their employees up to $50,000 of death-benefit coverage income tax-free. In addition to the term insurance, employers may also provide permanent benefits in the form of cash value life insurance policies, the premium, which is fully deductible to the corporation and a percentage of the premium payments must be included as taxable income by the participants. Since the owners of C corporations qualify as employees under the plan, they are eligible to take advantage of the attractive features that are available to the participants of a Section 79 plan. As business/owner participants, business owners can fully deduct the contribution/premium payments through the C Corporation, while recognizing only a portion of the premium. The participant has the ability to access the policy cash-values income tax free for supplemental retirement income or other purposes.

This program has become very popular with my clients since it requires minimal compliance work or third-party administration and provides significant leveraging between the full deduction to the corporation and the percentage recognized by the owner/participant as income. The income stream is tax free and the plan is not subject to the restrictive requirements of qualified plans. Furthermore, the cost to cover non-highly compensated employees is approximately $125 per year, however if the employee is willing to recognize additional benefits and can afford the additional income taxes the cost to the employer maybe higher. As a CPA/PFS, it would be great if you were able to provide your clients, in retirement, the flexibility to choose which bucket to access for income based on the current tax rates. This strategy will help your clients minimize the negative effect income taxes will have on their nest egg and maximize their annual income stream.

Remember that diversification is only part of the story. In order to truly prepare and maximize your clients’ future income stream, current and possible future income taxes must be taken into consideration. Be sure to talk to your clients about the full diversification process to provide them with the flexibility to choose between the different income “buckets” and meet your professional responsibilities.

Planning Ahead For Life's Little Moments

noreply@blogger.com (Anonymous) — Fri, 24 Jan 2014 20:03:00 +0000

Our latest flyer

Tax Reduction & Asset Protection

noreply@blogger.com (Anonymous) — Wed, 04 Dec 2013 22:54:00 +0000

Are you interested in reducing your taxes? Of course you are, who isn’t.

At Palma Financial Services, Inc., we specialize in building worry-free retirement plans for business owners and professionals through a combination of tax reduction and asset protection strategies.

Our clients are from diverse industries such as Construction Companies and Dental Practices. What they have in common is that they have utilized our services to reduce their taxes, on average, almost 40% each year they worked with our firm.

Over the past 15+ years we have saved our clients over $30,000,000 in income taxes.

During our initial consultations, topics to be discussed include the following:

1. Tax Reduction Strategies

What's more important, tax savings or rate of return?

Beyond 401(k)s and SEP-IRAs, is there a way to move money out of your practice or business in a tax-efficient manner to yourself personally and to your business?

2. Asset Protection Strategies

In order to succeed in accumulating assets for retirement, two different types of assets need to be protected:

a. Investment Assets - Are you concerned about the gyrations in the stock market and, if so, is there a way to protect your current stock, bond and mutual fund investment values from loss?

b. Income As an Asset - In the event of a critical illness, is there a way to cover the cost associated with that illness, such as medical expenses not covered by health insurance and, the loss of business and therefore, personal income not covered by disability insurance?

It is not too late to lock in a possible 40% reduction in your 2013 Income Taxes however you must act NOW. For a free, no-pressure consultation rom our tax planning & preparation consultants, call Palma Financial Services at 925-307-5454

Corporate Identity Protection Coverage for Dentists

noreply@blogger.com (Anonymous) — Thu, 21 Nov 2013 01:37:00 +0000

Dentists may not think their patients' private health information is in danger, however, what happens if your patients' records are lost or stolen?  It is not only disconcerting; it can also damage your reputation and your finances.

With more practices going paperless, dentists are increasingly at risk for a data breach, putting them in violation of HIPAA and HITECH privacy laws.

What is the top cause of privacy data breaches?  It is not hacker attacks like some would assume. It is lost or stolen electronic devices such as laptops, desktop computers, smart phones, and tablets. Employee or third party errors and criminal attacks are next on the list.

Many property and liability policies do not cover privacy data breaches. Because dental offices retain patients' personal information, such as their health history and social security numbers, all dental practices should consider Corporate Identity Protection.

Coverage Highlights

Personal Identity Liability  - Covers damages resulting from a lawsuit such as judgments, settlements, arbitration awards, punitive damages, court costs and legal fees an insured may become obligated to pay as the result of a privacy data breach.

Administrative Action Expenses  - Legal expenses incurred during an investigation, negotiation of a consent order, or formal administrative proceedings instituted by a federal, state or local agency arising out of the privacy data breach are covered.

Identity Event Services - Provides coverage for:

1. The services of a forensic investigator to determine the extent of the data breach and identify the individuals affected.

2. Crisis expenses for the services of a PR firm, crisis management firm or law firm to help restore the confidence of the insured's patients.

3. Notification costs such as correspondence, newspaper, radio and television ads intended to inform and educate any individual affected by the data breach.

4. Post event service expenses such as identity theft education, assistance and credit file monitoring.

Approximate Annual Costs and Coverage:

· $100 for $10,000 of coverage
· $150 for $25,000 of coverage
· $300 for $50,000 of coverage
· $600 for $100,000 of coverage

Protecting Your Family’s Future

noreply@blogger.com (Anonymous) — Mon, 11 Nov 2013 15:43:00 +0000

At a recent financial industry event, behavioral finance expert Meir Statman tried to put the risk of investment losses in perspective. “The real risks in life are not the stock market,” he said. “If you want real risk, get married. And if you want more risk, have children.”1

This statement makes an important point. Although investors are usually aware of market risk, they may forget about the risk of dying and leaving loved ones without the financial support they might need. Three out of 10 U.S. households have no life insurance, and half say they need more coverage.2

Coverage You Can Keep
You may have group life insurance through work, but the value of employer-based policies is generally not sufficient to replace 100% of lost income. And if you change employers, you would typically lose the coverage. There are two basic types of individual life insurance. One or both could be appropriate to help meet your needs.

Term life insurance is generally more affordable and may be more reasonably priced than you realize. One study found that consumers tend to overestimate the cost of life insurance by as much as 300%.3

Term insurance pays a death benefit if the insured dies within the covered time period, which could range from one to 30 years. Premiums may adjust each year or remain fixed for the full term, depending on the policy. You might be able to continue coverage beyond the original term at a higher premium, or possibly convert to a permanent policy (subject to age restrictions and policy minimums) while the policy is in force.

Permanent life insurance offers lifetime protection and a guaranteed death benefit as long as you keep the policy in force by paying the premiums. Although the premium for permanent insurance is usually higher than for term insurance, it typically remains level for the rest of your life.

A portion of the permanent life insurance premium goes into a cash-value account, which accumulates on a tax-deferred basis throughout the life of the policy. This may increase the death benefit, and you may be able to borrow against the cash value during your lifetime to help pay for retirement, education, emergencies, or other needs.

Withdrawals of the accumulated cash value, up to the amount of the premiums paid, are not subject to income tax. Loans are also free of income tax as long as they are repaid. Loans and withdrawals from a permanent life insurance policy will reduce the policy’s cash value and death benefit. Any guarantees are contingent on the claims-paying ability of the issuing insurance company.

As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. If a policy is surrendered prematurely, there may also be surrender charges and income tax implications.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable.

1) InvestmentNews, April 29, 2013
2–3) LIMRA, 2012

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright © 2013 Emerald Connect, Inc.

2013 Year-End Tax Planning

noreply@blogger.com (Anonymous) — Tue, 22 Oct 2013 15:13:00 +0000

Now is the time to lock in a strategy for year-end tax planning. This year in particular will see many changes - some tax breaks are expiring while some affluent individuals will witness higher rates.

Tax publisher, CCH, a Wolters Kluwer company, recently released a special report on 2013 Year-End Tax Planning.

It cites important changes made by the American Taxpayer Relief Act of 2012, provisions in the Patient Protection and Affordable Care Act of 2010, as well as the Supreme Court’s decision on same-sex marriage as some of the new legislation that will offer both challenges and opportunities to both individuals and businesses.

Taxpayers need to be aware of these changes and plan accordingly.

At Palma Financial Services in Dublin, CA we are not only an Accounting and CPA firm but also a full service Professional Financial Specialist (PFS) specializing in small and medium sized businesses as well as individuals and families. Call now to request a year-end tax planning consultation. By January 1st, it will be too late.

Obamacare Calculator

noreply@blogger.com (Anonymous) — Mon, 30 Sep 2013 14:58:00 +0000

On October 1, 2013, all U.S. citizens can begin shopping for affordable health care.

Kaiser Permanente, one of the largest health providers in California has created an online calculator (for all 50 states) to determine what you might be paying under the Affordable Care Act.

Simply plug in your zip code, income, family size, age and tobacco usage and you will get a rough estimate of how the Affordable Care Act might impact you financially.

If you have any questions regarding the tax ramifications please call Palma Financial Services and we will be happy to assist you.

October 15 Tax Deadline - Ways to Save

noreply@blogger.com (Anonymous) — Tue, 24 Sep 2013 14:47:00 +0000

The October 15 deadline is fast approaching. If you are looking for additional ways to reduce your tax liability, there is still time for Palma Financial Services, Inc. to secure your tax incentives. To find out if you qualify for additional tax credits or deductions, please contact us.

Ways to Save include the following:

Research & Development Tax Credit - Do you spend time improving your products or processes and formulas? Get up to 10% of your costs back!

Cost Segregation Study – Have you purchased, constructed, or spent more than $500k in tenant improvement / remodel during the last 15 years?

California Enterprise Zone Credit – Do you have more than 15 employees working in California? Get up to $37K of credits per employee!

Repair vs. Capitalization & Asset Retirement Studies – Have you spent more than $500K renovating your building in the last 10 years? New tax regulations allow for more deductions!

179D Energy Deduction for Commercial Buildings – Have you constructed or renovated commercial property since 2006? Get a deduction of $1.80 per square foot!

179D Energy Deduction for Architects/Designers – Have you implemented energy-efficient designs for government-owned buildings in the last four years? Get a deduction of $1.80 per square foot!

45L Energy Credit for Multifamily and Homebuilders - Have you constructed or renovated apartments, condos, or tract homes with 15 units or more in the last four years? Get a $2000 tax credit per unit!

Setup a Defined Benefit Pension Plan before 12/13 - A Defined Benefit Plan is a qualified retirement plan under which a retiring employee will receive a guaranteed retirement fund, usually payable in installments. Annual contributions may be made to the plan by the employer at the level needed to fund the benefit. The annual contributions are limited to a specified amount, indexed to inflation.

Establish a Section 79 Plan - Install a group-term life insurance plan and be eligible for a tax deduction.

Purchase or Lease New Equipment - There are tax incentives for purchasing or leasing new equipment. Check with your accountant for deciding which is best.

Capital Equipment or Fixed Assets?

noreply@blogger.com (Anonymous) — Thu, 22 Aug 2013 17:21:00 +0000

Time is quickly running out to take advantage of this year's increased Section 179 deduction and bonus depreciation. To take advantage of the increased limit, and bonus depreciation (both of which are currently set to expire on December 31, 2013) machine tool purchases must be placed into service before year end.

In 2014 the maximum expensing allowance will go from $500,000 down to $25,000. At the same time the investment limitation will drop from $2,000,000 down to $200,000.

Section 179 of the United States Internal Revenue Code allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense, rather than requiring the cost of the property to be capitalized and depreciated.

The time to act is now. If you have any questions regarding Section 179 deductions please call at your earliest convenience.

At Palma Financial Services, Inc in Dublin, CA we are not only an Accountant/CPA firm but also a Professional Financial Specialist (PFS). We excel at guiding you through the financial landscape whether it be for business or family. Our best referrals are our own customers, people just like you.

Upcoming Tax Deadlines

noreply@blogger.com (Anonymous) — Tue, 20 Aug 2013 18:31:00 +0000

The deadline for U.S. Individual Income Tax Returns (with extension) is October 15, 2013.

However, business entities need to be aware that the following forms are due September 16, 2013 (if an extension was requested):

Form 1041 - U.S. Income Tax Return for Estates and Trusts

Form 1065 - U.S. Return of Partnership Income

Form 1120 - U.S. Corporation Income Tax Return (C Corporations)

Form 1120S - U.S. Income Tax Return for an S Corporation (S Corporations)

On September 16, 2013 (less than a month away), Individuals and Corporations also need to file 2013 third quarter estimated tax payments (State: 540-ES, 100-ES; Federal: 1040-ES).

Please contact us today to ensure the timely filing of your income tax returns.

At Palma Financial Services, Inc in Dublin, CA we are not only an Accountant/CPA firm but also a Professional Financial Specialist (PFS). We excel at guiding you through the financial landscape whether it be for business or family. Give us a call for a no-pressure interview. Our best referrals are our own customers, people just like you.

Five Reasons to Begin Your Tax Planning Today

noreply@blogger.com (Anonymous) — Mon, 19 Aug 2013 21:32:00 +0000

It is never too soon for individuals or business owners to involve themselves in tax planning. In fact the earlier one begins the more prepared they will be and inevitably much less stressed once the tax deadline approaches.

Since everyone’s tax situation is different, instead of seeking advice from friends and family, it is highly recommended that you seek a professional financial advisor. Their expertise can guide you through such diverse areas as: child and marriage provisions, college funding, retirement planning, 401k’s, health insurance, life insurance, etc. As you can see tax planning involves much more than just taxes.

The following are five reasons why you should begin your tax planning today:

1) The Affordable Care Act. Regardless of your tax bracket the Affordable Care Act will not only affect your health insurance but also your taxes. Since it is the IRS that will be in charge of implementing these changes, you would be wise to consult a tax professional on all that’s involved. See IRS Affordable Care Act Tax Provisions for more info.

2) Estate Taxes. Estate, gift, and generation-skipping transfer tax laws are constantly changing. A new law went into affect January 2, 2013 and President Obama’s budget plan for 2014 includes even more changes. Year-end planning strategies include: annual exclusion gifts, lifetime gift exemptions, qualified charitable distributions, etc.

3) Alternative Minimum Tax (AMT). The AMT is an extra tax some people have to pay in addition to their regular income taxes. The exemption amounts change every year with a new inflation patch added January 1, 2013 through the American Tax Payer Relief Act of 2013. If your not sure about whether you owe any AMT consult a tax professional.

4) Individual Return Extensions. You filed for an extension of your federal tax returns, which are now due October 15, 2013. Do not wait until the last minute to take advantage of credits and deductions. Remember, it is not your patriotic duty to pay more taxes only what you rightfully owe.

5) Life Events. Life events include: buying a home, getting married, having a child, losing a spouse, starting a new business, and sending your kids to college. All of these events will affect your taxes.

At Palma Financial Services, Inc we are not only an Accountant/CPA firm but also a Professional Financial Specialist (PFS). We excel at guiding you through the financial landscape whether it be for business or family. Give us a call for a no-pressure interview. Our best referrals are our own customers, people just like you.

Wealth Inequality in America

noreply@blogger.com (Anonymous) — Tue, 09 Jul 2013 14:46:00 +0000

Is wealth in America equitable? What is your perception of wealth distribution? What is the reality? Watch the video, you may be amazed.

For more information see:

1) Infochart - Its the Inequality, Stupid

2) How Unequal We Are: The Top 5 Facts You Should Know About the Wealthiest One Percent of Americans

3) CEO pay is 380 times average worker's - AFL-CIO